There was just enough funds left in the former tax district's budget ($6.3 million plus $1.7 million in reserves) to cover the debt incurred by downtown redevelopment. City staff pitched it as a way of saving $1.3 million in interest and $1.5 million in administrative expenses now that the tax district may wind down five years faster than the anticipated 2019 end-date.
The vote may be one of the last for the "Successor Agency Oversight Board" created as a result of Gov. Jerry Brown's legislation to end redevelopment districts as a way to patch cuts to education spending. Along with the state, the board is charged with approving plans for the $32 million in assets that belonged to the former tax district found in a recent audit.
Monday's vote means that as early as 2014-15, the county, local schools and the city will begin to receive a share of downtown property taxes that have been withheld since the district was formed in 1969 to fund redevelopment and save the downtown from blight.
Board members made the vote without controversy or apparent concern.
With the district's debt paid, the biggest matter left to settle is a plan for managing downtown property purchased over years by the district, said Ellis Berns, economic development director for the city. That could happen as early as March. The city may lease the properties for ongoing revenue, unless the properties are sold to financially boost the schools and government agencies that tax the area.
"We hopefully will be able to keep the properties," Berns said. "There were certain changes in the legislation that began to clarify that we would be retain those."
"Our goal is to aggregate those and just to redevelop the sites," Berns said of the properties, which include a parking lot at California and Bryant streets where council members once hoped a grocery store would be built. "All these properties are not new acquisitions."
Resident Don Letcher said he was concerned about another matter — $2.3 million the former downtown district owed to the Shoreline Community, the city's unusual tax district north of Highway 101 that is exempt from the new state law ending redevelopment agencies. The $2.3 million is what's left of a $7 million loan used to subsidize the 51-unit affordable housing project under construction at Evelyn and Franklin streets.
"The money is coming out of Shoreline Park and is not going to be repaid without the oversight board approval," Letcher said. "That money should be repaid to the Shoreline Regional Park District. It's just outrageous."
Finance director Patty King said the state legislation that ended the downtown district "invalidated that loan" and it did not have to be repaid.
"The board could reinstate those loans," Kong said. "If those get reinstated those will become enforceable obligations. We couldn't just wind down the successor agency" as planned.
The board's next meeting is set for Friday March 1 at 10 a.m. at City Hall.